Bookkeeping at the agency was “convoluted,” the state auditor says.

AUGUSTA (AP) – The Department of Human Services has major accounting problems that go well beyond the recent discovery of $18.9 million in unaccounted federal funds, the state auditor said Monday.

More than $29 million in DHS expenses were challenged by state auditors in the 2002 fiscal year, auditor Gail Chase said. That equals 92 percent of the $32.3 million in spending challenged throughout state government.

Similarly, $5.1 million in DHS spending prompted the auditor’s office to raise red flags in 2001, Chase said. That amounts to 85 percent of the $6 million in total state spending the auditor questioned.

Against that backdrop, the $18.9 million is “a fairly large iceberg,” Chase said, but “there are other icebergs” at DHS that point to an even bigger problem.

The Human Services Department often claims to correct accounting problems or other deficiencies reported by the auditor’s office, but the same problems sometimes recur or similar problems crop up later in other DHS programs, she said.

The Department of Human Services, one of the biggest state agencies with an annual budget of about $1.8 billion, receives more federal money than any other state agency.

The $29.6 million in questionable spending in 2002 includes the missing $18.9 million, which DHS apparently spent without proper record keeping. Chase told lawmakers last week that her office’s annual report will question what happened to the money.

She has said she does not believe the $18.9 million was stolen, because her auditors have found that DHS spent the same amount of federal money in recent years as it received.

But how DHS spent all the federal money is unclear, Chase said, because of the agency’s “convoluted” bookkeeping.

That could mean, for example, that DHS spent federal funds in unauthorized ways, possibly by moving money between programs without permission or documentation.

State officials have said the state may have to repay the money to the federal government unless an explanation turns up.

Also at risk is the state’s bond rating.

If the rating agencies downgrade the state’s status, interest rates would be higher when the state borrows money.



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